European Wax Center (EWCZ) Q1 2025 earnings summary

Executive summary

• System-wide sales reached $225.9 million for Q1, up 2.1% year-over-year, with 1,062 centers in operation, but net new center openings were negative due to more closures than openings as franchisees paused expansion amid uncertain consumer demand.

• Total revenue declined 0.9% to $51.4 million, primarily due to lower retail/wholesale product revenue and lapping a COVID-related surcharge.

• Adjusted EBITDA increased 7.2% to $18.8 million, with margin up to 36.5% from 33.7%.

• Net income attributable to the company was $1.7 million, down 37.3% year-over-year, while Adjusted Net Income rose 10.3% to $9.5 million.

• Q1 marked the first full quarter under new CEO and CFO, with a sharpened focus on foundational improvements, franchisee support, and sustainable growth.

Financial highlights

• Product sales declined 2.1% to $28.9 million; royalty fees were flat at $12.4 million; marketing fees rose 1.5% to $7.2 million; other revenue increased 2.8% to $2.9 million.

• SG&A expenses rose 13.9% to $15.3 million, mainly due to payroll, benefits, and executive severance.

• Interest expense increased 4.7% to $6.6 million; effective tax rate rose to 35.0% from 24.9%.

• Ended Q1 with $58.3 million in cash and $389 million in senior secured notes outstanding.

• Net cash from operating activities was $12.7 million for the quarter.

Outlook and guidance

• Reiterated full-year 2025 guidance: system-wide sales of $940–$960 million, revenue of $210–$214 million, adjusted EBITDA of $69–$71 million, and adjusted net income of $31–$33 million.

• Net center count expected to decline by 28 to 50 in fiscal 2025, with 10–12 openings and 40–60 closures.

• Same-store sales expected flat to +2%; Q2 may be flat to slightly down due to Easter shift.

• Liquidity is expected to be sufficient to support operations and growth strategy for at least the next twelve months.

• Tariff impacts are being actively managed and are included in current guidance.